Environmental Programs

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Sustainable Environment Initiatives KLA-Tencor is dedicated to complying with the appropriate and relevant environmental laws and standards worldwide, including product development, sales, service and maintenance, and ensuring they are conducted in an environmentally responsible manner. KLA-Tencor is committed to preventing pollution and to the continual improvement of its environmental programs.

Each year we (1) evaluate our impacts on the environment; (2) identify those areas of impact over which the company has sufficient control;

and (3) establish goals and objectives in those areas to reduce our environmental impacts.

Since the inception of our environmental management system, we have, for example, consistently focused on the issue of solid waste production in our manufacturing facilities. Through a combination of recycling, educational programs and the dedication of our Corporate Facilities and Real Estate department, we are proud to report an average of 80 percent diversion rate of solid waste away from landfills in our main campus in Milpitas, Calif., annually.

To carry out our environmental policy, we:

Regularly evaluate the aspects of our operations and the impacts of these activities on the environment

Materials and Packaging The KLA-Tencor Packaging Engineering Group continues to make strides in reducing our environmental impact. Since 2006, KLA-Tencor has prohibited the use of bleached corrugated boxes, polystyrene loose fill, and, since 2012, foam-in-place materials.

KLA-Tencor implemented the first-of-its-kind qualified Reuse, Refurbish and Recycle Program for crates in 2006, and we continue to expand the program to different countries, suppliers and materials to further reduce the amount of material entering the waste stream. We also prohibit the use of fumigation for all wood packaging materials. Heat treatment is the only approved method in accordance with ISPM 15. Our established standard is bubble wrap made of at least 50 percent recycled content and reusable cases for 100 percent of optical components.

Considerable cost and effort goes into the design and manufacture of KLA-Tencor systems and subassembly crates. Over the past several years the Packaging Engineering Group has driven design for reuse, allowing for maximum return on investment and minimal impact on the environment. During FY 2015, we expanded the reusable case program to a wider range of repairable high value components and, in FY 2016, we have also reached out to work with key suppliers to help them establish reusable case programs of their own. By sharing our core expertise for case design, best practices and knowledge of sourcing materials for reusable cases, KLA-Tencor has helped incubate and grow reusable case programs for several suppliers, which multiplies the benefit of our efforts to reduce the environmental impacts associated with conventional single-use packaging.

Transport Since 2013, KLA-Tencor has pioneered another key transportation mitigation effort by reducing the size by volume of its system and customer support shipping activities. This has provided a cost-saving opportunity and has significantly helped to offset the overall environmental impacts of our carriers.

The program focuses on space optimizing all shipments by designing shipping materials that are tailored to the size of the specific equipment being shipped rather than defaulting to a one-size-fits-all approach that requires the largest needed container size, causing wasted space in-shipments.

The use of collapsible crates is another KLA-Tencor innovation that enables reusable packaging materials that can be shipped empty at approximately half of the size by volume required for a full-size crate. The half-size collapsible crates can be shipped by air using standard freight aircraft rather than jumbo freighters, thereby saving on fuel cost and allowing carriers to optimize fuel-to-load parameters. This helps to minimize the overall transportation impacts for reshipping, redeployment, and/or return of systems in the field that need to be moved to a new location.

We encourage employees to utilize digital technology to reduce the need for travel both locally and globally. Many of our facilities are equipped with HDTV video conferencing capabilities to provide a more environmentally responsible alternative and mitigate the need for employee travel.

Water The water conservation efforts at Milpitas headquarters campus continued in 2015, primarily aimed at reducing demand for fresh water. The 10 percent potable reduction goal was not reached due to increased use of high efficiency chillers for cooling systems and delays with city and state
permitting to transition cooling tower water from potable to recycled. The company completed necessary infrastructure and implementation plans are proceeding, so the stage is set for significant future savings.

Emissions Electric and gas utility portfolio improvements continue to include an increased blend of renewable sources, however a California Energy Commission ruling (Decision 06-120-032) resulted in an improved, yet higher, conversion metric and led to an increase to KLA-Tencor’s carbon emissions reported for CY 2015.

Effluents and Waste Through a combination of recycling, educational programs and the dedication of our Corporate Facilities and Real Estate department, we are proud to report a consistent diversion rate of solid waste away from landfills at our main campus in Milpitas, Calif., of more than 80 percent for FY 2016.

The FY 2016 waste management program’s most notable achievement involved removal of all polystyrene food packaging and beverage cups, plastic stir straws, cup lids and utensils from our headquarters site. Compostable paper products are now available throughout the dining and break areas on campus, and compost bins are located at each waste and recycle bin location.

Employee diversion and compost sorting was the primary message of the onsite Earth Day recycle booth. Compost is by far the most challenging recycle stream because employees are accustomed to what they separate at their homes and must adapt to different standards at work; to ensure compliance, breakroom compost monitoring has been conducted by janitorial staff. The goal for FY 2017 remains intact with further employee compost education and reinforcing the tenets of Reduce, Reuse, Recycle!

A Global Perspective on Green Initiatives: As a global company, KLA-Tencor is committed to working closely with all countries where we manufacture and sell our products to ensure that the innovations and environmental best practices developed in any of our locations can be leveraged throughout the organization.

In addition, we proactively share ideas and green innovations within our supplier ecosystem in order to help raise the level of environmental performance across the whole spectrum of our business activities. KLA-Tencor expects suppliers to comply with standards and best practices to ensure compliance by (1) promoting standards within their companies, (2) implementing supporting business processes, (3) self-certifying, measuring, auditing and reporting performance against those standards, (4) appropriately training their employees and (5) requiring the same standards of their suppliers.

Supply Chain Environmental and Social Responsibility Management KLA-Tencor is committed to ensuring that the companies in our supply chain also reflect our values by providing a safe workplace environment for their employees and properly and ethically manage their labor practices. Just as we set high standards for our own employment practices, we expect all suppliers to treat their workers with dignity, respect and fairness. To ensure effective management of labor practices and workplace safety, we require our suppliers to have in place policies, risk assessments, improvement programs, procedures and management reviews, that define their standards, identify concerns and take corrective actions on an on-going basis.

We use a variety of tools and processes to manage supplier performance, including the Supplier Score Card (SSC). The SSC includes a category to measure supplier social responsibility programs in addition to categories such as cost, quality, technology, delivery and service. Part of this evaluation includes reviewing that the supplier behaves ethically and complies with anti-bribery and anti-corruption laws such as the US Foreign Corrupt Practices Act and has processes and programs in place to train and educate its employees as well as audit, and report against its compliance to the minimum standards as set forth by the Responsible Business Alliance (RBA).

KLA-Tencor has adopted the Supply Chain Code of Conduct guidelines as defined by the Responsible Business Alliance (RBA). The RBA is a collaborative effort by the world's leading electronics companies, working together to improve efficiency and social, ethical and environmental responsibility in our global supply chains. KLA-Tencor obtained full membership status as a result of meeting the RBA compliance goals and objectives for new members.

In accordance with RBA guidelines, KLA-Tencor has established a comprehensive set of audit and compliance processes for our entire supply chain, including the following:

Key suppliers for each KLA-Tencor plant are required to complete a structured self-assessment each calendar year

KLA-Tencor continues to increase the number of suppliers completing these structured self-assessments over the previous reporting period

Based on these assessments, suppliers are assigned to risk categories

Detailed third-party Validated Audit Process assessments are required each year on 25 percent of suppliers in the high risk category

Additional audits of the supply base are considered to proactively identify and correct potential issues

In order to produce environmentally sound products, a companywide approach to environmental management is important. A critical component of the standard purchase agreement we put in place with our suppliers is that they establish environmental policies and monitor, control and properly manage energy consumption, air emissions, waste, wastewater, hazardous substances and chemicals generated from operations. This gives us increased visibility and authority regarding the environmental activities at the facilities where items are made for us.

KLA-Tencor's standard purchase agreements include a section on “Environmental, Health, Safety and Corporate Social Responsibility.” Under that provision, suppliers are required to have appropriate certifications, including ISO 14001; maintain standard operating procedures for Environmental, Health and Safety (EHS) guidelines; and comply with RoHS, REACH and other environmental and safety laws, regulations and requirements.

Human Rights Commitment: KLA-Tencor is committed to upholding the human rights and dignity of all people, including those employed through KLA-Tencor, our subsidiaries and affiliates, and our supply chains.

KLA-Tencor believes that any activities that fuel conflict, violate human rights or lead to serious environmental degradation are unacceptable. We want to ensure that all materials used in our products come from socially and environmentally responsible sources. The issue is currently particularly acute with regard to so-called “conflict minerals” from the Democratic Republic of Congo and adjoining countries. Even though KLA-Tencor does not source or buy metals directly, we are very concerned about the potential link between mining and the conflict in the Democratic Republic of Congo and adjoining nations. We are appalled by the reports from the conflict areas and strictly condemn all activities that fuel conflict or benefit militant groups. We require high ethical standards in our own operations and our supply chain and take continual action to ensure that metals from that fund the conflict in those regions do not enter our supply chain. KLA-Tencor has actively worked independently and with suppliers, industry peers and other stakeholders to improve traceability and ensure responsible sourcing. We are now participants in the Responsible Minerals Initiative (RMI) and work to identify smelters in our supply chain with the Conflict Minerals Reporting Template. In a 2017 Conflict Mineral Benchmarking Study by Development International, KLA-Tencor continues to comply with conflict minerals filings and compliance requirements.

KLA-Tencor maintains a set of policies, procedures and processes that respect human rights and that identify, prevent, and mitigate human rights abuses. These mechanisms continue to keep KLA-Tencor free from human rights violations and provide for continuous improvement opportunities. There were no human rights violations reported or discovered in any of our facilities worldwide last year.

Our supply chain partners are also required to adhere to the Responsible Business Alliance (RBA) Code of Conduct and annually assess their operations against this code. The RBA Code of Conduct is a set of standards on social, environmental and ethical issues in the electronics industry supply chain. This Code is a set of standards that helps our suppliers identify and mitigate risks of non-compliance within their own supply chain.

Grievance Processes & Employee Communication: KLA-Tencor provides several channels and options for employees to file grievances or report concerns such as unlawful discrimination, safety issues or potential ethics problems. Employees can contact their manager, others in their management chain or the Human Resources Department. In most countries, they also have the option of reporting issues through our third-party channel at EthicsPoint, which ensures the concern will get to the appropriate management authority. We also provide the option for issues to be reported anonymously, where permitted by local law.

KLA-Tencor has a strict non-retaliation policy that protects employees who file grievances or report issues from being subjected to any form of retribution or retaliation.